Another no, no, no, but yes situation. Apparently Sokol, according to BH’s audit committee, has violated several company rules. Amazing to see greed from the elite unfolding again.

“Former Berkshire Hathaway executive David Sokol intended to deceive the company in the way he disclosed his interest in Lubrizol Corp and violated Delaware law in the way he behaved, the company’s audit committee concluded in a scathing report.” (Reuters)

http://www.reuters.com/article/2011/04/27/us-berkshire-idUSTRE73Q7SI20110427

Don’t get fooled, todays up move is totally offset by the Usd detoriation. Chicken or the egg?

While the chairman was on air, people sold Vix again. All back to normal, zero rates, no volume melt up and DXY collapsing accompanied by the Vix.

No more Cool Aid and scanning of texts from pressreleases from the Fed. Volumes to dry up further?

“Computer trading programs face two dilemmas. There is no history of how security prices have reacted during a press conference with the U.S. central bank chief, and dialogue from the briefing will be spoken, rather than transmitted as text.

Computer-driven trading programs are designed to recognize text, so the nuances of Bernanke’s answers to reporters will be lost, or at least delayed, as humans intervene. That will make this inaugural conference a learning lesson for future Bernanke press briefings.”

http://www.reuters.com/article/2011/04/27/us-usa-fed-markets-algorithms-idUSTRE73Q4YC20110427

So much for the non event from chairman Bernanke. The story goes on, inflation is a fact, although Fed doesn’t want to see it. Oil spiking, Gold new highs and the Usd is soon gone.

Vix, the ex fear index, according to many that have never traded options, is up 3% today. What if this is implying some caution going forward, or can stocks never go down?

“Faced with largely the same set of facts when it comes to their inflation outlook, some of the world’s major central banks have come to markedly different conclusions about the appropriate policy.

 The ECB began to exit from its accommodative policy by increasing its policy rate by 25 basis points to 1.25% on April 7. The ECB noted that growth was improving moderately, but inflation had increased to 2.6% and was up from 2.45% the previous month. The rise was largely due to increases in energy, food, and commodity prices. The concern was the potential second round effects and that these increases could become embedded in inflation expectations.

 The same day, the Bank of England kept its policy rate at 0.5%, despite the fact that inflation had been running well above its target rate of 2% for more than a year and was likely to remain so through 2011. Again, the Committee noted that the near term path for inflation was higher due to energy, imported commodities and other goods. Concern was also expressed about inflation expectations having risen in the UK, the US and the euro area relative to what they had been before the financial crisis. Finally the UK real economy was softer than that of the EU generally with output having declined by 0.5% in the fourth quarter of 2010.

 While the FOMC will meet this week, Fed Chairman Ben Bernanke and Vice-Chair Janet Yellen have already signaled that they view the recent increases in commodity, energy and food prices as transitory. Governor Yellen in particular provided an extremely thorough and detailed dissection of the inflation data and her views on the real economy and employment in her April 11th speech in New York. She indicated clearly that the causes of the run-up in food, energy and commodity prices were rooted in increases in global demand, combined with energy supply shocks and uncertainty about oil flow from the Middle East. Like the Chairman, she expressed the view that the increases were transitory. Most notably she attempted to debunk the widely discussed view that accommodative policies in the US were the cause of the increase in global prices. She was very clear that the main concern was for the US expansion and employment situation, that the current stance of policy was appropriate, and that QE II would be completed as scheduled. So we don’t expect any notable news coming from this week’s FOMC meeting.” (IRA)

Full article,

http://us1.institutionalriskanalytics.com/pub/IRAMain.asp

Five bullet points from the letter sent to Mr Geithner yesterday by the Treasury Borrowing Advisory Commitee. The commitee consists of people from MS, GS, Soros, PIMCO etc….

First, foreign investors, who hold nearly half of outstanding Treasury debt, could reduce their purchases of Treasuries on a permanent basis, and potentially even sell some of their existing holdings. A sustained 50 basis point increase in Treasury rates would eventually cost U.S. taxpayers an additional $75 billion each year.

Second, a default by the U.S. Treasury, or even an extended delay in raising the debt ceiling, could lead to a downgrade of the U.S. sovereign credit rating

Third, the financial crisis you warned of in your April 4th Letter to Congress could trigger a run on money market funds, as was the case in September 2008 after the Lehman failure

Fourth, a Treasury default could severely disrupt the $4 trillion Treasury financing market, which could sharply raise borrowing rates for some market participants and possibly lead to another acute deleveraging event.

Fifth, the rise in borrowing costs and contraction of credit that would occur as a result of this deleveraging event would have damaging consequences for the still-fragile recovery of our economy.

Finally, I would emphasize that because the long-term risks from a default are so large, a prolonged delay in raising the debt ceiling may negatively impact markets well before a default actually occurs.

Full letter;

geithner letter

“As he has explained many times, the Fed has alternatives. It could announce that it would keep its benchmark rate at zero for a few years, which would probably hold down long-term rates. It could say that it was comfortable with higher inflation for a limited period of time, given how low inflation has been since 2007 and how high unemployment is. Above all, Mr. Bernanke could make clear that he considers years of widespread unemployment to be unacceptable.

He has not done so, and he has yet to offer a satisfying rationale.

Instead, he has said that more aggressive action brings risks. And it does. Low interest rates have the potential to spark inflation, by enticing millions of households and businesses to borrow money and causing the economy to overheat. Higher inflation could, among other things, increase borrowing rates for the United States government and worsen the deficit.” (NYT)

http://www.nytimes.com/2011/04/27/business/27leonhardt.html?_r=2&ref=business